George Osborne's questions

For how can we justify the incomes of those out of work rising faster than the incomes of those in work?

How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?

How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?

The answer to the first question is that benefits are not linked to earnings. If they were, they would be much higher than they are currently. We have linked them to a very low income standard which is increased in line with inflation. That also means that a fall in wages does not lead to a fall in benefit rates.

We don’t actually ‘give’ flats to anyone; we do help some people to rent. The second question seems to mean to ask: ‘should we pay anything towards the rents of young people who have never worked?’ and the obvious answer to that question is, ‘yes’. The young person leaving care, the divorced or separated mother, or the young person seeking work all need somewhere to live. I do not personally think that Housing Benefit is a good system – I think it made far more sense to provide public housing, than to provide a complex, variable and unpredictable benefit which may or may not achieve its purpose – but if we have Housing Benefit, neither work record nor age is obviously the most relevant criterion for working out who should be supported and who should not be.

The third question seems to be: should people on benefits be insulated from the costs of having a child? I am puzzled by that question. Which part of the benefits system has that effect?